Sole Proprietors and Partnerships (SPP) Scheme launched to help businesses in financial distress

01 NOV 2020

01 Nov 2020 Posted in Press releases

  1. The Association of Banks in Singapore (“ABS”), together with the support of several member banks, and the Ministry of Law (“MinLaw”) are launching the Sole Proprietors and Partnerships (“SPP”) Scheme to help eligible businesses facing financial distress restructure their unsecured business debts. The SPP Scheme will be administered by Credit Counselling Singapore (“CCS”), a non-government-linked organisation, which is a member of the National Council of Social Service and a registered charity involved in debt restructuring since 2004.
  1. Applications for the SPP Scheme will be accepted by CCS with effect from 2 November 2020.

Background

  1. In view of the impact that COVID-19 has on businesses, MinLaw has provided a range of measures to help businesses tide through. This includes a legal framework for the temporary relief from legal action due to the inability to perform certain contracts arising from the COVID-19 pandemic, rental relief as well as increased monetary thresholds for bankruptcy and insolvency for financially distressed individuals and businesses. However, even as Singapore starts to re-open, some industries may not return to pre-pandemic levels and financially distressed companies may still face potential insolvency.
  1. As such, MinLaw is introducing a Simplified Insolvency Programme under the Insolvency, Restructuring and Dissolution (Amendment) Bill to assist micro and small companies (“MSCs”)1 that require support to restructure their debts to rehabilitate the business, or to wind up the company as the business has ceased to be viable.
  1. To complement the Simplified Insolvency Programme, the SPP Scheme was developed with the support of several member banks of ABS, CCS, the Monetary Authority of Singapore (“MAS”), Enterprise Singapore (“ESG”) and the Participating Financial Institutions (“PFIs”) under the ESG loan schemes2, to provide targeted help for sole proprietors and partnerships3 with the restructuring of their unsecured business debts.

Key features

  1. Under the SPP Scheme, businesses operating as sole proprietors or partnerships may seek the assistance of CCS in restructuring their unsecured business debts owed to the participating lenders4. The SPP Scheme allows for lower monthly instalment payment for unsecured business borrowings by extending the loan repayment period to up to a maximum of 8 years. Interest rates for the restructured loans will be based on the individual loan’s original contractual terms, subject to a maximum of 7% p.a.. Approval of the SPP Scheme application is at the sole discretion of the participating lenders.

  1. The SPP Scheme is targeted at sole proprietors and partnerships whose businesses are experiencing difficulties in servicing their loan commitments but are likely to recover given time and concession for their loan repayment terms. To be eligible for the SPP Scheme, the following criteria apply:

    a. Businesses must be operating as sole proprietors or partnerships5;

    b. The SPP’s total unsecured debt does not exceed S$1 million;

    c. The SPP owes unsecured debts to two or more lenders; and

    d. The SPP’s unsecured debts are owed to the participating lenders4.

  1. Businesses interested in the SPP Scheme may attend the CCS Business Debt Management Webinar or call CCS at 6929 1928, 9 am – 6 pm, Monday – Friday (except Public Holidays), or email spp@ccs.org.sg, for queries on the SPP Scheme application.
  1. In addition to the SPP Scheme, businesses may also tap on the complementary support measures introduced by MAS6 to help Small and Medium-sized Enterprises (“SMEs”) that are likely to still face cashflow difficulties in 2021. These are the Extended Support Scheme – Standardised (“ESS-S”), which allows eligible SMEs to defer 80% of principal repayment on their secured loans, hire purchase agreements and loans granted under ESG’s loan schemes; and the Extended Support Scheme – Customised (“ESS-C”), which facilitates the restructuring of an SME’s credit facilities across multiple banks and finance companies. The ESS-C is open to SMEs with more than one lender for whom the Simplified Insolvency Programme, when operational, and the SPP Scheme are not suitable. Borrowers can apply for the ESS-C with any one of their lending banks or finance companies from 2 November 2020.

MINISTRY OF LAW
01 NOVEMBER 2020

1. Micro and small companies are companies with an annual revenue of less than $1 million and $10 million, respectively. ↩

2. This refers to financial institutions participating in ESG’s Enhanced Enterprise Financing Scheme - SME Working Capital Loan and Temporary Bridging Loan Programme. ↩

3. A sole proprietorship is defined as a business that can be owned and controlled by an individual, a company or a limited liability partnership. A partnership is defined as a business owned by 2 to 20 partners. ↩

4. American Express, CIMB Bank, Citibank, DBS Bank, Diners Club, ETHOZ Capital, Goldbell Financial Services, HL Bank, Hong Leong Finance, HSBC Bank, Maybank, OCBC Bank, RHB Bank, Singapura Finance, Sing Investments & Finance, Standard Chartered Bank, United Overseas Bank. ↩

5. Excludes Limited Liability Partnerships and Sole Proprietorships/Partnerships that are owned by private limited companies. ↩

6. Please visit the MAS website for more details. ↩

Last updated on 01 Nov 2020